NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 07-TAR-048-BC

MEMBER:

JOHN ZAWASKI (ZJ)

LEGACY CBOT REG. VIOLATION:

350.05 (Trading Practices)

The following acts are prohibited and shall constitute acts detrimental to the welfare of the Exchange . . .

(a) No person shall purchase any futures contract, purchase any call option or sell any put option for his own account, or for any account in which he has an interest, or for an account over which he has discretionary trading authority, while in possession of any executable order of another person for the purchase of any futures contract, the purchase of any call option or the sale of any put option in the same product.

CBOT RULE  VIOLATION

548 (Priority of Execution)

In pit trading, non-discretionary customer orders shall be executed in accordance with their price and time priority. A member shall not execute a discretionary order, including, without limitation, an order allowing the member discretion as to time and price, while in possession of an executable customer order. No person shall allocate executions in any manner other than an equitable manner.

FINDINGS:

After a full evidentiary hearing on the merits, on March 3, 2011, a Panel of the CBOT Business Conduct Committee (“Panel”) found that on August 10, 2007, John Zawaski traded for his personal account at a better price than an executable customer order in his possession. Additionally, on July 1, 2008, John Zawaski improperly allocated a 100 lot trade at 11,360 into his error account rather than to his customer. Although Zawaski did not profit from this error, his customer was disadvantaged by receiving a fill of 11,380 instead of 11,360. The calculated price adjustment for the order would have been 100 contracts adjusted from the price of 11,380 to 11,360, or $20,000 (i.e., 100 contracts x 20 ticks x $10/tick). The Panel found that in so doing, Zawaski violated legacy CBOT Regulation 350.05(a) and CBOT Rule 548.

PENALTY:

In accordance with its findings, the Panel, (1) fined Zawaski $20,000, (2) ordered him to pay restitution in the amount of $20,000, (3) barred him from membership of any CME Group Exchange for a period of 18 months, and (4) barred his direct access to the CME Globex® electronic trading platform for a period of 18 months, beginning April 20, 2011, and continuing through October 19, 2012, inclusive.

EFFECTIVE DATE:

April 20, 2011